U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening Builds

Transcription

1 U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening Builds QE To End, Bond Yields To Rise: Just What The G-7 Does Not Need For The End Of 2! Carl Weinberg, Chief Economist

2 U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening Builds

3 Daily Notes on the United States HFE Global Webinar September 28, 2 1a. GDP Growth Has Been Weak By Past Standards Real GDP During Recoveries, Trough= b. Yet Unemployment Rate Has Generally Declined Rapidly Change In Unemployment Rate From Peak During Recoveries, Percentage Points Current Cycle -4-5 Current Cycle Quarters After Trough Quarters After Peak

4 Daily Notes on the United States HFE Global Webinar September 28, 2 2a. Core Inflation Measures Have Drifted Up in The Past Year % Change In Price Index From Months Earlier Core CPI Core PCE Cleveland Fed Median CPI Atlanta Fed Sticky CPI Cleveland Fed Trimmed-Median CPI Dallas Fed Trimmed-Mean PCE 4 2b. Wage-Rate Measures Have Started To Accelerate ECI: Private Sector Wages Per Hour, %chya ECI: Private Sector Wages Per Hour, Ex Incentive-Paid Occupations, %chya Employment Report: Average Hourly Earnings, %chya Atlanta Fed Per-Hour Wage Tracker, %chya Fed Goal For PCE Prices Core PCE

5 Daily Notes on the United States HFE Global Webinar September 28, 2 3. Unemployment Rate Has Been Close To Flat Recently Just A Pause? Unemployment Rate, % Actual Reported Rate Mid-Point Of Fed Projections, As Of Nov 2 Mid-Point Of Fed Projections, As Of Sep 2 Mid-Point Of Fed Projections, As Of Sep 2 Median Of Fed Projections, As Of Sep 2 Median Of Fed Projections, As Of Sep Median Fed Estimate For Longer-Run Normal Unemployment Rate: 4.8%

6 Daily Notes on the United States HFE Global Webinar September 28, 2 4a. Labor Force Growth Has Almost Caught Up With Jobs Growth Household Survey Employment, Break-Adjusted, %chya Labor Force, Break-Adjusted, %chya Payrolls, Excluding Temporary Census Hiring, %chya Shaded Bar Denotes Recession Period b. Participation Rate Is Up A Little Labor Force Participation Rate, % Shaded Bars Denote Recession Periods

7 Daily Notes on the United States HFE Global Webinar September 28, 2 5a. Downtrend In Unemployment Rate Resuming? 5b. Hard To Fill Vacancies (Plotted Inversely) Have Been Rising Conference Board Job Market Assessment, % Plentiful Minus % Hard To Get (Left) Unemployment Rate, % (Right) Unemployment Rate, % (Left) NFIB Survey: Net % With Hard-To-Fill Job Openings (Inverted, Right) Shaded Bars Denote Recession Periods

8 Daily Notes on the United States HFE Global Webinar September 28, 2 6a. Mixed Signals From Jobless Claims And ISM Data 6b. ISM Data Have Not Been Reliable For Payrolls Recently Jobless Claims, s Per Week (Left, Inverted) Composite ISM Index (Right) Shaded Bars 6 Denote Recession Periods Change, Thousands Per Month, 3-Month Average Reported Payrolls, Ex-Census Effects Model Estimate Based On ISM Employment Indexes Shaded Bar Denotes Recession Period

9 Daily Notes on the United States HFE Global Webinar September 28, 2 7a. ust Weakening In Mfg ISM Index Not Due To Exports Manufacturing ISM Export Orders Index (Left) Real Good Exports, %ch From 6 Months Ago In 3-Month Avg, Annual Rate (Right) b. The Dollar s Uptrend Has At Least Paused Fed's Nominal Broad Trade-Weighted Dollar Index, Jan 1997 =

10 Daily Notes on the United States HFE Global Webinar September 28, 2 8a. Biz Confidence Is Subdued, But No Sign Of Sudden Drop 8b. Consumer Confidence Measures Have Generally Held Firm Business Roundtable CEO Survey Overall CEO Outlook Index (Left) Net % Planning To Raise Capex In Next 6 Months (Right) 7 Michigan Sentiment Index (Left) Conference Board Confidence Index (Right) Debt-Limit Scare Market Turmoil 8 Shaded Bar Denotes Recession -2 Period Govt Shaded Bars Denote Shutdown Recession Periods

11 Daily Notes on the United States HFE Global Webinar September 28, 2 9a. Term Premiums In The Bond Market Are Historically Low 1-Year Term Premium*, % Nominal 1-Year Treasury Yield, % 1-Year Risk-Neutral Yield*, % Shaded Bars Mark Fed Tightening Periods Bond Market Conundrum *NY Fed data; methodology developed by Tobias Adrian, Richard Crump & Emanuel Moench. 9b. Markets Have Varied During Fed Tightening Cycles 1-Year Treasury Yield, % (Left) S&P 5, Log Scale (Right) Bars Denote Fed Tightening Periods

12 QE To End, Bond Yields To Rise: Just What The G-7 Does Not Need For The End Of 2! Carl Weinberg, Chief Economist

13 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist IMF Measure Of World Trade Value, Billions Of U.S. Dollars Monthly Data Through e 2 IMF Measure Of World Trade Value Vs GDP Growth World Exports In U.S. Dollars, Percent Change Year Ago, Right Axis World GDP, Percent Change Year Ago, Left Axis Yearly World Trade And GDP Data Through

14 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist IMF Measure Of World Trade Volume, Percent Change Year Ago Blue Line Is World Trade Volume In U.S. Dollars, Black Line Is Three-Month Moving Average Green Line Shows HFE Index Of G-7 + China Industrial Output To y

15 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist Japan: BoJ Holdings Of JGBs And JGTBs Japan Sovereign Yield Curve Recent Changes As A Percentage Of Central Government Debt Issuance, Monthly Data To ust 2 Jan 6 Jan 7 Jan 8 Jan 9 Jan 1 Jan Jan Jan Jan Jan Jan September 23, 2 September, 2 3-Day 6-Day 9-Day 1-Year 2-Year 5-Year 1-Year 2-Year 3-Year Japan: Industrial Production Index Japan: Population, Millions Of Persons Seasonally Adjusted Monthly Index, 21 = 1 Industrial Output Still 17.7% Below 28 Pre-Crash Peak And Reduced To 1988 Levels Census Benchmark In 21 Distorts Trend

16 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist Euro Zone: ECB Holdings Of Sovereign Bonds Euro Zone: Industrial Production Index As A Percentage Of Central Government Debt Issuance, Quarterly Data To Sep 2* 2 Seasonally Adjusted, 21 = 1, Trend Since 2 Drawn 1 Jan 6 Jan 7 Jan 8 Jan 9 Jan 1 Jan Jan Jan Jan Jan Jan 1 5 Still Well Below 28 Pre-Depression Highs! Euro Zone: Exports, Percent Change Year Ago Euro Zone: Bank Lending, Percent Change Year Ago Yellow Line Shows Five-Month Moving Average 3 Total MFI Lending Lending To SMEs Ex-Mortgages Jan 9 9 Jan 1 1 Jan Jan Jan Jan Jan Jan

17 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist United Kingdom: BoE Holdings Of Gilts In The APF United Kingdom: CBI Index And Retail Sales Volumes As A Percentage Of Total Gilt Issuance, Monthly Data To ust 2 Mar 9 Mar 1 Mar Mar Mar Mar Mar Mar Sales Volumes, %chya (To, Right Axis) Sep 7 Mar 8 Sep 8 Mar 9 VAT Rate Distortions Sep 9 Mar 1 Sep 1 Mar Sep Mar Sep CBI Index Of Retail Sales (Left Axis) Mar Sep Mar Sep Mar Sep Mar Sep United Kingdom: Current Account Balance, Billions United Kingdom: Broad Money Supply M4 And Lending Quarterly Rate, Line Shows Four-Quarter Moving Average Q2 Q1 Q3 Q2 Q1 Q3 Q2 Q1 Q3 Q2 Q1 Q3 Q2 Q Q3 Q2f Billions Of Pounds Sterling 1 2 M4 Total M4 Lending f

18 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist Monthly Change China: FX Reserves, Billions Of U.S. Dollars China: Trade Balance, Seasonally Adjusted, RMB Billions Black Line Is -Month Moving Average China: Credit Intensity In GDP Or GNI, Three Measures 98 Overall Credit Intensity In GDP Ratio Credit Intensity In GDP Ex-SOBs Credit Intensity In National Income Ex-SOBs China: Retail Sales, Percent Change Year Ago China: Quarterly Balance Of Payments, Billions Of Dollars Green Line Shows CPI-Adjusted Sales 25 2 Change In FX Reserves FDI Current Account Balance Capital Flow (Positive Is Outflow) Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2-2

19 HFE Global Webinar September 28, 2 Carl B. Weinberg, Chief Economist China: Yearly GNI* Growth Rate, Percent Yearly National Income* Growth 1-Year Average (Demonstrated Potential) *Calculated As GDP Plus Net Capital Outflow Estimated By HFE China: Yearly GDP Growth Rate, Percent Yearly GDP Growth 1-Year Average (Demonstrated Potential) GDP Growth

20 U.S. Slack Keeps Shrinking, Slowed But Not Stopped By Global Headwinds; Case For Fed Tightening Builds QE To End, Bond Yields To Rise: Just What The G-7 Does Not Need For The End Of 2! Carl Weinberg, Chief Economist